Another solid month of job gains
WASHINGTON (AP): A burst of hiring in February underscored the resilience and confidence of US businesses, which are adding workers at the fastest pace in 17 years.
Yet the strong job gains did little to raise wages last month.
United States employers added 295,000 jobs, the 12th straight monthly gain above 200,000, the government said Friday. And the unemployment rate fell to 5.5 per cent from 5.7 per cent. But the rate declined mainly because some people out of work stopped looking for jobs and were no longer counted as unemployed.
The average hourly wage rose just three cents to US$24.78 an hour. Average hourly pay has now risen just 2 percent over the past 12 months, barely ahead of inflation.
Still, over that time, 3.3 million more Americans have gotten jobs. More jobs and lower gas prices have led many consumers to step up spending. That's boosting the economy, offsetting sluggish growth overseas and giving employers the confidence to hire.
Most analysts have forecast that the economy will grow about 3 per cent this year, supporting about 250,000 job gains a month. Those increases should raise pay this year, they say.
Friday's figures provide "more evidence that the labour market is recovering rapidly, with employment growth more than strong enough to keep the unemployment rate trending down," said Jim O'Sullivan, chief US economist at High Frequency Economics.
Falling unemployment "makes more acceleration in wages increasingly likely."
At 5.5 per cent, the unemployment rate has now reached the top of the range the US Federal Reserve has said is consistent with a healthy economy. That could make it more likely that the Fed will raise interest rates from record lows as early as June.
"This is quite a symbolic change that increases the pressure on the Fed to hike rates in June," said Paul Dales, an economist at Capital Economics said.
Indeed, after the jobs report was released Friday, investors sold ultra-safe US Treasurys, a sign that many anticipate a Fed rate hike. The yield on the 10-year Treasury note rose to 2.24 per cent from 2.11 per cent before the report was issued.
Investors also sold stocks. The Dow Jones industrial average plummeted 278.94 points to close at 17,856.78.
February's hiring gains were broad-based. Some of the industries with the biggest gains include mostly low-paid work: Hotels and restaurants added 60,000 jobs, retailers 32,000. But higher-paying fields also added jobs: Professional and business services, which include accountants, engineers and lawyers, gained 51,000, construction 29,000 and financial services 10,000.
The US job market and economy are easily outshining those of other major nations. Though Europe and Japan are showing signs of growing more than last year, their economies remain feeble. The euro currency union's unemployment rate has started to fall, but at 11.2 per cent it remains nearly twice the US level.
The US economy expanded at a breakneck annual pace of 4.8 per cent in last year's spring and summer, only to slow to a tepid 2.2 per cent rate in the final three months of 2014. Many economists estimate that growth is picking up slightly in the current quarter to an annual rate of 2.5 per cent to nearly 3 percent.
Still, economists remain bullish about hiring despite the slowdown in growth. The fourth quarter's slowdown occurred largely because companies reduced their stockpiles of goods.